Engineering Sales, Inc. v. United States of America, Roland E. Cedarholm and Elizabeth B. Cedarholm v. United States

CLARK, Circuit Judge:

Engineering Sales, Inc. (Sales) sued in the district court to recover taxes assessed and paid as a result of the Commissioner’s allocations of income to it from a controlled corporation, Engineered Products, Inc. (Products) pursuant to 26 U.S.C. § 482. In a separate, consolidated action Ronald E. and Elizabeth B. Cedarholm sought to recover income taxes paid which were attributable to related dividends from Products to their children which, following the allocation, were assessed to Mr. and Mrs. Cedarholm as constructive dividends. We reverse the district court’s partial…